Tag Archives: PBGC

12.02.24
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ARPA Update as of November 29, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

We hope that you had a very enjoyable holiday weekend. Welcome to December. That doesn’t seem possible.

Despite the holiday shortened week, the PBGC was quite busy, announcing that four multiemployer plans had submitted applications seeking Special Financial Assistance (SFA). Those funds included Laborers’ Local No. 91 Pension Plan, Southwestern Pennsylvania and Western Maryland Area Teamsters and Employers Pension Fund, Oregon Processors Seasonal Employees Pension Plan, and The Legacy Plan of the UNITE HERE Retirement Fund. Local 91’s application was its initial attempt at getting the SFA, while the other three submitted revised applications. In total, these four are seeking a total of just over $1 billion for the 102,356 plan participants. A significant majority of the assets being requested and plan members are in the UNITE HERE fund.

With regard to the Teamsters’ plan, they withdrew and then resubmitted the application on November 27th. That plan is hoping to receive $120.7 million in SFA for the 2,759 members of its fund. In other news, two funds received approval for their applications, including Lumber Industry Pension Plan and Local 1034 Pension Plan. Both plans had submitted revised applications. In total, they will get $159.6 million in SFA and interest for 7,155 plan participants. I suspect that the announcement of a successful PBGC approval made for a wonderful Thanksgiving celebration.

Finally, there were no applications denied, no funds repaid excess SFA, and no plans sought to be added to the waitlist at this time, which continues to list 53 non-priority plans that have not yet been allowed to submit an initial application.

The two plans that received approval for the SFA last week brings to 102 the number of plans that have been awarded SFA grants ($69.7 billion) since the program launched in July 2021. There are still 100 plans that may be eligible to receive this special financing.

11.25.24
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ARPA Update as of November 22, 2024 – #100!!!

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to Thanksgiving Holiday week. We wish for you and your family a day filled with love, laughs, and lots of great eating. I wish for myself a TV blackout so that I don’t have to watch the Giants!

We are thrilled to report that the PBGC has approved the Special Financial Assistance (SFA) for the 100th multiemployer plan. Employers’ – Warehousemen’s Pension Plan, a Los Angeles, CA, based non-priority plan will receive $41.4 million in SFA grants and interest for its 1,821 plan participants. The PBGC has now approved grants in the amount of $69.5 billion. By our estimate, there are still 102 funds in the queue to potentially receive an SFA allocation. Clearly, there is much more to do.

In other news from last week, Laborers’ Local No. 265 Pension Plan was permitted to submit a revised application seeking just over $55 million to support its 1,460 members. Rounding out the week, there were no applications denied or withdrawn. There were no excess SFA funds returned. Finally, no pension funds sought to be added to the waitlist, which currently has 58 funds waiting to submit an initial application.

As we enter the Thanksgiving holiday week, let us be incredibly thankful for how beneficial the ARPA legislation has been for the 1,414,505 plan participants who have seen their promised benefits SECURED. For many of these pensioners who were in pension plans on the verge of collapse, the securing of these benefits through the SFA grants has been the difference between supporting oneself or being at the mercy of the Federal social safety net through no fault of their own. The nearly $70 billion may seem like a steep price to pay to some, but it is far less expensive than the cost of a pay-as-you-go system to support those 1.4 million American workers who buy goods and services with their pension checks. We all benefit from that activity. Great job ARPA and the PBGC.

11.13.24
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ARPA Update as of November 8, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

The PBGC continues to implement the ARPA legislation, although last week revealed less apparent activity according to its weekly update. The legislation which was approved in March 2021 and implemented beginning in July of that year, has now been active for about 3 1/3 years. I remain impressed with the PBGC’s effort to-date, as 98 pension plans have received Special Financial Assistance grants and interest totaling more than $69.4 billion. Wow!

Regarding last week’s activity, there was one fund invited to submit an initial application. The Aluminum, Brick & Glass Workers International Union, AFL-CIO, CLC, Eastern District Council No. 12 Pension Plan, is seeking $10.6 million in SFA for 580 plan participants. The PBGC has until March 6, 2025 (I can’t believe that is only 120 days away!) to act on the application.

In other news, Local 734 Pension Plan, an IBT fund out of Chicago, withdrew its initial application seeking $109 million for its 3,453 members. That application had been submitted on July 15, 2024 and it was nearing the PBGC’s 120-day deadline.

There were no applications denied, no excess funds repaid, no applications approved, and no plans added to the waitlist, which continues to list 62 funds yet to file an initial application. Finally, US Treasury interest rates continue to rise across the yield curve providing plan sponsors with the wonderful opportunity to reduce the cost of securing the promised benefits through the SFA grants, while the legacy assets and future contributions benefit from an extended investing horizon.

11.04.24
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ARPA Update as of November 1, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to November. I’m shocked by how quickly the year is flying by. I’m also thankful that the incessant political commercials will soon be behind us.

The PBGC had a very good and busy last week, as we witnessed quite a bit of activity in the implementation of the ARPA legislation. Always pleased to announce that three plans received approval for Special Financial Assistance, including the last member of the #6 priority group. Pension Plan of the Marine Carpenters Pension Fund (their initial application), United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Pension Plan (the Priority Group 6 member), and Local 111 Pension Plan were granted a total of $736.1 million for just over 32k participants.

In addition to the approvals, the eFiling portal was open to Lumber Industry Pension Plan and the Laborers’ Local No. 130 Pension Fund. In the case of the lumber Industry plan, it appears that they get to chop off some of the wait time for approval as their application indicates an expedited review. This plan is seeking $103.2 million for 5,834 members. Local No. 130 filed its initial application in which they are hoping to receive $32.1 million for 641 plan participants.

There were also four plans that withdrew initial applications for SFA. Alaska Plumbing and Pipefitting Industry Pension Plan, Lumber Industry Pension Plan, Upstate New York Engineers Pension Fund, and Pension Plan of the Automotive Machinists Pension Trust were collectively seeking $438.3 million for just under 22k participants. Each of these plans are non-priority funds. Only 15 of the original 87 Priority Group members have not received approval at this time.

Finally, there were no applications denied during the prior week and no funds rebated excess SFA on account of census errors. There were also no pension plans added to the waitlist which stands at 63 that haven’t seen any activity at this time. There hasn’t been a plan added to the waitlist since July 2024 with the addition of the Production Workers Pension Plan.

10.28.24
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ARPA Update as of October 25, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to the last week of October. Like many of us, I can’t wait to see my children’s and grandchildren’s costumes on Thursday. The weather in NJ will be more like June than the end of October. Enjoy!

With regard to the PBGC’s effort to implement the ARPA pension legislation, last week’s activity was rather muted. I’m happy to report that we had one plan’s application approved, as I.B.E.W. Pacific Coast Pension Fund will receive $75.5 million in SFA and interest for 3,318 plan participants. This brings the number of approved applications to 95 and the total award of SFA to $68.8 billion. There are still 107 applications that are in the queue to eventually (hopefully) receive special financial assistance, with 64 yet to file an initial application.

Also, during the past week, we had the Laborers’ Local No. 265 Pension Plan withdraw its application. That plan is seeking $55.6 million for 1,460 members of its plan. This was the initial application for this fund which had been filed on July 11, 2024. There has been a total of 117 applications filed and withdrawn throughout the ARPA implementation. Some funds have seen multiple applications withdrawn and resubmitted.

Given the limited activity last week, it isn’t surprising to learn that the eFiling Portal remains temporarily closed. There is still much to accomplish with this legislation and time, although not currently an issue, will become one should this process linger beyond 2025.

Lastly, the recent move up in US Treasury rates bodes well for those plans receiving SFA and wanting to use cash flow matching to secure the promised benefits. Ryan ALM is always willing to produce an initial analysis on what can be achieved through CFM in terms of a coverage period. Don’t hesitate to reach out to us.

10.15.24
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ARPA Update as of October 11, 2024

By: Russ Kamp, Ryan ALM, Inc.

I hope that you enjoyed a wonderful holiday weekend. Autumn’s beautiful colors are finally present in the Northeast – enjoy those, too. As you will soon read, the PBGC had a busy week according to its latest update, so the extra day of rest was likely necessary.

The PBGC’s effort implementing the ARPA legislation continues in full swing. During the prior week there were three new applications received, two approved, another 2 withdrawn, and finally there were two more plans rebating excess SFA as a result of census corrections. Thankfully, there were no applications rejected. Lastly, there were no multiemployer plans seeking to be added to the waitlist (non-Priority Group members).

The plans receiving approval included Midwestern Teamsters Pension Plan and the Carpenters Pension Trust Fund – Detroit & Vicinity. The Carpenters nailed a $635.0 million SFA grant for its 22,576 participants, while the much smaller Midwestern Teamsters plan received $23.6 for 615 members. The PBGC has now awarded $68.6 billion in SFA grants to 94 pension systems.

Sheet Metal Workers’ Local No. 40 Pension Plan, Warehouse Employees Union Local 169 and Employers Joint Pension Plan, and Local 111 Pension Plan were granted the opportunity to submit requests for SFA grants. In the case of Local 111, they submitted a revised application. They are collectively seeking $124,7 million for 6,193 plan members. Good luck! In other news, the Teamsters Local 210 Affiliated Pension Plan and Local 111 Pension Plan withdrew their initial applications. These two funds were seeking $137.3 million collectively.

Finally, Milk Industry Office Employees Pension Trust Fund and Local 805 Pension and Retirement Plan rebated excess SFA grant money as a result of a census audit that confirmed overpayment. The Milk Industry delivered $193k (2.4% of the SFA received) to the PBGC, while Local 805 forked over $3.2 million (1.8% of the grant). Both represented a larger percentage of the SFA received than the previous transactions. At this time, 21 plans have returned $147.5 million in SFA and interest representing 0.37% of the grants received.

I hope that you find these updates useful. I remain incredibly bullish regarding the ARPA legislation and the positive impact that it continues to have on the American worker that earned this pension promise. Please don’t hesitate to reach out to Ryan ALM with any questions related to the legislation and what should be done to secure the promised benefits with the SFA grant assets.

10.07.24
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ARPA Update as of October 4, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to October. It is always a beautiful time of year in New Jersey.

With regard to the PBGC’s implementation of the ARPA legislation, there was some activity last week. After a short pause in accepting applications, the PBGC accepted two initial applications from two non-Priority Group members. Cement Masons Local No. 524 Pension Plan and the Roofers Local No. 75 Pension Plan, both Ohio-based, filed applications seeking $11.3 million combined in SFA for 486 plan participants. As a reminder, the PBGC has 120 days to act on those applications.

In addition to the 2 new applications, the PBGC recouped another $1.2 million in SFA overpayments due to census errors. This brings the repayment to of excess SFA to $144.1 million for 19 plans. The recovery of SFA amounts to 0.37% of the grant monies awarded. In other news, there were no applications approved, denied or withdrawn during the last week. There also were no funds seeking to be added to the waitlist.

As the chart above highlights, there are 110 funds yet to have applications approved. US Treasury yields are once again on the rise after a dramatic retreat as bond investors plowed into bonds anticipating very aggressive rate cuts by the Federal Reserve. Higher rates reduce the PV cost of those FV payments of benefits and expenses. A defeasement strategy significantly reduces interest rate risk as FVs are not interest sensitive. As we’ve discussed on many occasions, using a cash flow matching strategy to meet those benefits and expenses reduces the uncertainty associated with a traditional benchmark relative fixed income product. We are happy to discuss this subject in far greater detail.

09.30.24
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ARPA Update as of September 27, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to the last update for September 2024. Let’s hope that today brings at least one Mets’ win in Atlanta. It would mark quite the turnaround from where this team was on June 1st.

With regard to the PBGC’s implementation of the ARPA legislation, the efiling portal still remains temporarily closed. As a result, new applications have not been forthcoming. There are presently 22 applications with the PBGC. Sixteen of those must be acted on by November 30th.

Activity was fairly limited during the past week. There were no applications approved or denied. There was one application withdrawn. Bricklayers Pension Fund of West Virginia withdrew the initial application seeking $1.2 million for the 170 plan participants. In addition, 3 funds repaid a portion of the SFA grant received. Mid-Jersey Trucking Industry and Teamsters Local 701 Pension and Annuity Fund, the Pension Plan of the Bakery Drivers and Salesmen Local 194 and Industry Pension Fund, and the Building Material Drivers Local 436 Pension Plan each returned a portion of the overfunding due to incorrect census data. In total, the three plans returned $2.7 million from the $348.3 million received in SFA or 0.78%. To date, 17 plans have returned $142.3 million or 0.36% of the grant monies received. Lastly, there were no additional plans seeking to be added to the waitlist, which remains at 68.

Please don’t hesitate to reach out to us with any questions that you might have regarding investment strategies for the SFA assets. We are always willing to model your plan’s forecasted cash flows so that various implementations can be reviewed.

09.23.24
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ARPA Update as of September 20, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Welcome to Autumn! It has always been my favorite season since I was a young boy. I would often listen to NY Giants football on the radio as I spent Sunday afternoons outside in the crisp fall air while raking leaves or lying in a freshly created pile. Unfortunately, the Giants weren’t very good in the ’60s and ’70s. I guess what goes around comes around.

I knew that this day would come since I publish an update on the weekly activity associated with the ARPA pension legislation. There was no obvious activity by the PBGC last week. In their latest update, the PBGC is not reporting any new applications received (the efiling portal remains temporarily closed), no applications were approved, denied, or withdrawn, no plans repaid a portion of the SFA due to census errors, and finally, no multiemployer plans sought inclusion on the waiting list. Oh, well. Even the PBGC needs a rest once in a while.

Perhaps the PBGC was focused on the Fed’s interest rate policy decision like the rest of us. So, I’ll take advantage of the clean slate and use my weekly update to summarize where we are at this stage of the PBGC’s implementation of the ARPA pension legislation which began in July 2021. To date, 92 multiemployer plans have received Special Financial Assistance totaling $68.0 billion in grants (inclusive of supplemental awards, interest, and FA Loan Repayments). Of the 92 approved applications, 38 (41.3%) were the initial application attempt. There has been only one plan that had its application denied for ineligibility. Bakery Drivers Local 550 and Industry Pension Fund had its initial application denied in January 2023. A subsequent application was withdrawn in July 2023.

There are currently 23 applications before the PBGC. Five of those 23 will have the 120-day review period elapse in October. There is still one Priority Group 1 member that hasn’t filed an application out of the 30 funds identified as Priority Group 1 eligible. In addition, there are currently 18 applications that were withdrawn that have yet to refile. As I’ve previously reported, 14 funds have repaid a portion of the SFA received because of overpayment due to incorrect census data. There may be more to come.

The Waitlist had 115 multiemployer plans at one time. Twenty-one of those plans have received SFA grants, another 21 are presently under review, while five applications were withdrawn and not refiled. That leaves 69 plans that have yet to get PBGC approval to submit the initial application. While last week may have been “quiet” for the PBGC from an external point of view, a tremendous effort has been put forth to get to this point with potentially lots more to go.

09.16.24
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ARPA Update as of September 13, 2024

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

Will it be 25 or 50? That is the big question on nearly every investor’s mind this week. Will the Federal Open Market Committee cut rates by 0.25% or 0.5% on Wednesday. Any cut would mark the first such move by the Federal Reserve since 2020. Despite the uncertainty as to the Fed’s potential action, the PBGC was undaunted as they had another busy week implementing the ARPA pension legislation.

There is plenty to highlight from last week’s activity, as three funds received approval of their applications seeking Special Financial Assistance (SFA), one fund repaid a portion of its SFA grant, while another withdrew its initial application. There were no applications filed this past week as the PBGC’s filing portal is temporarily closed. Multiemployer plans seeking SFA may still “request to be placed on the waiting list in accordance with the instructions in PBGC guidance.”

The three funds receiving SFA were Teamsters Local Union No. 469 Pension Plan, Pension Plan Private Sanitation Union, Local 813 I.B. of T., and Local Union No. 226 International Brotherhood of Electrical Workers Open End Pension Trust Fund. These funds were each non-Priority Group members and the applications were the initial filings for each. In total, these pension plans will receive $238.3 million in SFA and interest for just over 6k members.

Local 1783 I.B.E.W. Pension Plan, an Armonk, NY non-Priority Group member, withdrew its initial application. They were seeking $42.2 million in SFA for the 850 plan participants. The Alaska Iron Workers Pension Plan received approval for its application in January 2023. They have just agreed to return $384,111.74 from the $53.5 million received in February 2023, as a result of a census error. This is the fourteenth plan to return a portion of the SFA due to overpayment.

As one can see, the PBGC has approved 92 of a potential 202 applications (45.5%) at this time for a total of $68 billion in SFA, including interest FA loan repayments. As a reminder, plans receiving SFA proceeds must keep those separated from the plan’s current fund (legacy assets). Despite the recent decline in US interest rates, defeasing benefits and expenses as far into the future as the SFA grant will cover is still the proper course of action. I produced a post last Friday on the correct approach to cash flow matching for those considering such a strategy.